StarkWare, the Israeli company behind the Starknet Layer 2 network, is laying off an undisclosed number of employees and reorganizing into two independent business units as it attempts to convert its zero-knowledge technology leadership into sustainable revenue.

Co-founder and CEO Eli Ben-Sasson announced the changes in a company-wide town hall and a subsequent post on X, telling staff that StarkWare has become “too big and too inefficient” for the leaner, faster-moving strategy the company now requires.

“We built the best, safest, most battle-tested ZK tech in blockchain,” Ben-Sasson wrote. “We’ve redefined blockchain using our technology, but that’s not enough.”

The restructuring comes amid a collapse in Starknet’s revenue, which peaked near $6 million in November 2023 but has since fallen to roughly $4,000 in daily fees through the first half of April, per DefiLlama.

The decline is not unique to Starknet. Ethereum’s Dencun upgrade in March 2024 introduced EIP-4844, which replaced gas-intensive calldata with lightweight blobs and significantly slashed Layer 2 transaction fees. The upgrade was a boon for users but gutted fee revenue across the board for rollup providers, a dynamic that has only intensified over the past year. DeFi protocols deploying across multiple L2s have found that over 90% of their fee income still accrues on the Ethereum mainnet.

Under the new structure, StarkWare will operate two purpose-focused units, one led by researcher Avihu Levy and another led by Tom Brand, each serving as a general manager with dedicated business development, engineering, product, and go-to-market teams. Ben-Sasson said the company would adopt a “startup mode” mindset, emphasizing small teams, rapid experimentation, and iterating quickly toward product-market fit.

Levy recently led work on a quantum-safe Bitcoin transaction scheme that uses only existing Bitcoin consensus rules to sidestep the network’s contentious upgrade process. That research is broadly in line with the direction Ben-Sasson outlined for the new applications unit, which will focus on products with “immense potential revenue” that rely on StarkWare’s proprietary stack, including Cairo, Sierra, and its STARK-based cryptography, while minimizing dependencies on external L1 networks.

Additional leadership changes accompany the restructuring. CFO Ran Grinshtein will take over supervision of finance, human resources, security, and IT. Head of Core Engineering Gideon Kaempfer will become chief architect, reporting directly to Ben-Sasson. COO Oren Katz is leaving and will remain in the role through the end of April.

STRK, Starknet’s native token, is trading near $0.033, according to CoinGecko, down more than 95% from its all-time high in March 2024.

The cuts add to a wave of layoffs across the crypto sector this year. StarkWare, which closed its Series D at an $8 billion valuation in 2022 and has raised $287 million in total funding, declined to comment.

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